A stubborn conservative minority in the U.S. Senate in December stood in the way of sensible energy legislation that would shift tax breaks away from Big Oil, which doesn’t need them, and toward renewable energy companies that do. All indications are they would do it again if the energy bill that passed the House by a wide margin last week was brought to the Senate floor. The Senate leadership should do it anyway. Let the American public see who is standing for common sense energy and tax policy and who stands for throwing more tax benefits at cash-soaked oil companies.
Oil hit a record-breaking $104 a barrel on Wednesday, and with that oil company profits are sure to break records as well — just as was the case for Exxon Mobil, which last month recorded the largest quarterly profit ever for an American company. Flush with cash and encouraged by the high price oil is fetching on the world market, Exxon Mobil has announced that it will spend $25 billion to $30 billion a year through at least 2012 on capital and exploration projects.
Announcements like that one bolster the arguments made by House Democratic leaders, who steered to passage the Renewable Energy and Energy Conservation Tax Act (HR 5351) by a vote of 236-182. The bill cancels just under $14 billion worth of subsidies to the five biggest U.S. oil companies so those funds can be used to help pay for subsidies for companies that produce power from wind, solar and other renewable energy sources.
The total amount of the canceled tax subsidies is only half of what Exxon Mobil spent in 2007 buying back its own stock. Clearly, Exxon Mobil doesn’t need an assist from American taxpayers.
The legislation is now sitting in the Senate Finance Committee, where Max Baucus, D-Mont., is the chairman. When similar legislation came before the Senate in December, 59 members voted to allow the legislation to proceed to a final vote, but 40 senators—39 Republicans and one Democrat—voted in favor of filibuster, goaded on by a veto threat from President Bush. That effectively killed a bill that the majority of the Senate, not to mention a majority of the American people, favored.
Bloomberg quotes an oil industry analyst as saying that since that vote, “we have seen no indication that Republican opposition to the oil and natural gas tax hikes [has] abated, making the offsets the Democrats seek for the renewable programs the albatross on the bill.”
Nonetheless, on Monday Senate Majority Leader Harry Reid promised:
“As oil prices reach record highs in a weakening economy, Democrats remain committed to repealing Big Oil’s tax breaks and instead use that money to expand incentives for investing in energy-efficient vehicles and renewable energy.
“Bush Republicans blocked our efforts to do so last year, but we will soon give them another chance to help lower prices at the pump and reduce our reliance on oil.”
One way to get the bill through the Senate, reports Congressional Quarterly, “is to include reconciliation instructions on the energy tax provisions in the fiscal 2009 budget resolution, a process that would provide a way around the Senate’s 60-vote hurdle for ending a filibuster.”
But the Senate leadership should not shy away from one more frontal assault on the obstructionists who cling to the laughable White House line that repealing unnecessary tax breaks for cash-drunk oil companies amounts to a tax increase. We should see who is prepared to face 30-second ads in their states calling attention to their vote for tax breaks for maintaining the status quo of oil dependency and against incentives to move toward a clean energy future.